NURS 6221 Week 10 Workforce Budget Analysis Example

Workforce Budget Analysis: Pricing the Term's Recommendations

Student Name

College of Nursing, Walden University

NURS 6221: Managing Human Resources

Instructor Name

Month Day, Year

Workforce Budget Analysis: Pricing the Term's Recommendations

This analysis prices the five workforce recommendations made for our composite progressive care unit this term. Each is built from hours and full-time equivalents (FTEs) first and converted to dollars using the assumed rates in Table 1. The rates are planning assumptions for this exercise, not the hospital's actual contract rates, and they should be replaced with finance office figures before any request goes forward.

Table 1

Rate Assumptions

Summary

Table 2

Cost and Offset by Recommendation

The Arithmetic, Recommendation by Recommendation

Charge nurse. Covering the role around the clock takes 8,760 productive hours a year, or 4.8 FTEs at 1,830 productive hours each. The budget must pay for 4.8 × 2,080 = 9,984 hours, because vacation, education and sick time are paid whether or not the role is staffed on a given day. At the base rate plus benefits, that is $584,064. This is by far the largest cost, and its return is in safety and staff support rather than in dollars saved.

Agency for weekend nights. The unit used about 435 agency hours a quarter on weekend nights, or 1,740 a year, which at $95 an hour costs $165,300. If the same hours were filled by the unit's own nurses picking up extra shifts, most would fall beyond 40 hours in a workweek. Under the Fair Labor Standards Act, non-exempt employees who work past 40 hours in a workweek must be paid at least one and a half times their regular rate (29 U.S.C. § 207), and nondiscretionary incentive pay counts toward that regular rate. An incentive hour past the threshold therefore costs 1.5 × $60 = $90, so agency coverage costs about $5 more per hour, or roughly $8,700 more a year. The case for agency rests on fatigue, not on price.

Capped incentive shifts. Allowing up to two incentive shifts per nurse per schedule is expected to fill about 600 hours a year. If half of those hours fall beyond 40 hours in a week, the cost is 300 × $60 plus 300 × $90, or $45,000. The same hours bought from an agency would cost $57,000, a saving of about $12,000.

Extended orientation. Four added orientation shifts for an estimated two new graduates a year come to 96 hours at the base rate plus benefits, $5,616. The offset depends on retention: the cost of replacing a nurse, which Jones (2008) shows how to estimate and update for inflation from a hospital's own baseline, is far larger than this amount.

Stay interviews. Thirty minutes at three, six and nine months for 14 new hires is 21 manager hours, or $1,638.

Variance and Ranking

Against the current budget, the proposals add roughly $590,000, almost all of it the charge nurse role, while the agency and incentive changes roughly offset each other. By net cost, from lowest to highest: the capped incentive shifts (a net saving), stay interviews, extended orientation, agency weekend nights and the unassigned charge nurse. The first three should proceed immediately. Agency coverage should continue because of the fatigue risk of overtime, which the evidence on agency staffing does not show to carry a mortality penalty once work environments are accounted for (Aiken et al., 2013). The charge nurse role needs its own business case to the director, built on safety events and turnover rather than on this table.

References

Aiken, L. H., Shang, J., Xue, Y., & Sloane, D. M. (2013). Hospital use of agency-employed supplemental nurses and patient mortality and failure to rescue. Health Services Research, 48(3), 931-948. https://doi.org/10.1111/1475-6773.12018

Fair Labor Standards Act of 1938, 29 U.S.C. § 201 et seq. (1938).

Jones, C. B. (2008). Revisiting nurse turnover costs: Adjusting for inflation. Journal of Nursing Administration, 38(1), 11-18. https://doi.org/10.1097/01.NNA.0000295636.03216.6f